CORPORATESISSUER COMMENT 10 AUGUST 2015PRUDENTIAL FINANCIAL, INC. (PRU)Moodys Senior Unsecured Rating Baa1Moodys Outlook STABond-Implied Rating A3CDS-Implied Rating Baa1EDF-Implied Rating Ba2As of 8/06/2015ANALYST CONTACTSAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Market Signals ReviewPrudential Financial, Inc.: Fixed Income Market Signals Advance The two credit market signals for PRU have both improved from their levels 90 days ago. The bond-implied rating rose one notch to A3 (Figure 1). The CDS-implied rating also climbed by one notch, to Baa1. The EDF'-implied rating matches its Ba2 level of three months ago.We believe the reduction in PRUs exposure to variable annuity guarantee risks (discussed below) contributed to the better level of the fixed income market-implied ratings.FIGURE 1. MOODYS AND MARKET-IMPLIED RATINGS PRUDENTIAL FINANCIALS, INC., LAST 3 MONTHS (DAILY DATA)The bond-implied ratings gap progressed from zero notches 90 days ago to +1 notch. The CDS-implied rating now matches PRUs senior debt rating from Moodys of Baa1; accordingly, the CDS-implied ratings gap is now zero notches, up from -1 notch three monthsMOODY'S ANALYTICS CORPORATES2 10 AUGUST 2015 MARKET SIGNALS REVIEW : PRUDENTIAL FINANCIAL, INC.: FIXED INCOME MARKET SIGNALS ADVANCEago (Figure 2). The EDF-implied rating has stayed within a very narrow band over the last 90 days and is currently identical to the level three months ago of Ba2, which represents a -4 notch EDF-implied ratings gap. Readers will recall that market-implied ratings gaps may change as a result of the performance of the credit spreads of the underlying securities, a change in the Moodys rating, or both.FIGURE 2. MOODYS AND MARKET-IMPLIED RATINGS GAPS FOR PRUDENTIAL FINANCIAL, I...
